FICO score on new immigrant

[Anonymous]

Hello,

My husband is in the middle of becoming a resident alien, and the process should be complete in about 5-6 weeks. We were considering buying a home until we found out that our state is a community property state, and he would have to be placed on the loan. The problem is he will have a brand new SS # and 0 credit history and FHA loans require a score of at least 580. Even though my credit score and history are very good, they will not be able to grant us a loan unlesss his score is 580 as well.

My question is, I spoke with a family member that is a loan processer, and she stated when you start out with new credit, your score is in the 600 range. I called my lender and he admitted he did not know. Does anyone know if this is really true?

Thanks in advance

[pattycake]

KG - welcome to the forums!  Post on the mortgage boards to see if Shane or Dallas can help you with this one. 

Your husband should also try to start out with one small credit card, or you can add him to one of yours as a co-applicant as soon as he gets a SS#, since your credit is already established.  

[Anonymous]

I'm a resident alien and in Texas (a community property state)

He does NOT need to be on the loan - if someone told you that then they have their wires crossed... he does need to have any debts or loan payments he is making included in the Debt to Income ratio.  So say if he had a car loan in his name, or student loans, with a payment of $x per month that would need to be added to your monthly payments for your debts and included in the DTI calculation on just your income (with you applying in your sole name).  If he has no debts and your income alone will support the application then he does not need to be included in the mortgage at all (tho he should be able to be included on the deed of the house if you want him to and that's a positivie thing as far as proof of genuine marriage goes in two years when he has to get his conditions removed from his greencard)

[Anonymous]

Thanks for the quick replies

Susyquik ~ If we were to go with getting a convention loan he would be on the deed only and his not used to qualify... but for a FHA loan he is required to be included for the loan. (Or so I have been told by 2 seperate banks, I did not know that myself).

Conventional requires 10% down which we would barely have for the lowest of our price range. That would also require the sellers' to pay our closing costs, and would totally wipe up of all our savings. At this point if the credit score isn't 580 we might just have to wait a year to build his credit. Which I'm guessing is going to be difficult with no credit history

[donkort]

Is the minimum FICO score for FHA mortgages back down to 580?  That would be good for many people who are seeking mortgages! 

[llecs]

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donkort wrote:
Is the minimum FICO score for FHA mortgages back down to 580?  That would be good for many people who are seeking mortgages! 

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620 is standard, but a few still accept below that. YMMV based on the lender.

[Anonymous]

Yes, most banks are 620, but if they have a manual underwriter they can override and accept 580 (One of the banks I spoke with is able to do this).

[AndySoCal]

Do you have a couple a credit card accounts that you use regularly that has a good payment history? If so make your husband an authorized user on the accounts and allow them to report. Your husband will now have a credit history and credit score.

[Anonymous]

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@Anonymous wrote:

Thanks for the quick replies

Susyquik ~ If we were to go with getting a convention loan he would be on the deed only and his not used to qualify... but for a FHA loan he is required to be included for the loan. (Or so I have been told by 2 seperate banks, I did not know that myself).

Conventional requires 10% down which we would barely have for the lowest of our price range. That would also require the sellers' to pay our closing costs, and would totally wipe up of all our savings. At this point if the credit score isn't 580 we might just have to wait a year to build his credit. Which I'm guessing is going to be difficult with no credit history

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There are ways round that

Non-Purchasing Spouse (Borrower’s spouse is NOT on the loan application or the purchase contract) (Community Property States)

For purchases, if the subject property is located in a community property state OR for refinances, if the Borrower resides in a community property state, the following requirements apply:

• A credit report for the non-purchasing spouse is required to determine any joint or individual debts that must be considered in the credit analysis. Any accounts that were opened by the spouse, but are joint accounts with the purchasing Borrower must be included in debt ratio to qualify for the loan.
• A Clear CAIVRS on the spouse is required.
• Even if the non-purchasing spouse does not have a social security number, a credit report is still required.
• All debt of the spouse must be included in the Borrower’s debt ratio (use 5% of the outstanding balance if not specified on the credit report), unless such inclusion of debt is specifically prohibited by state law.
• If debts of the non-purchasing spouse are in dispute, they need not be counted provided the file contains satisfactory documentation to support the fact that the account is in a current dispute status.
• A poor credit history of a non-purchasing spouse should not be the sole basis for declining the loan.

If it is required by a state law in order to perfect the valid and enforceable 1st mortgage lien, the non-purchasing spouse must sign the security instrument (mortgage) OR the spouse must provide satisfactory written documentation to verify he/she is relinquishing all present and future rights to ownership of the subject property.

You may want to speak to a broker who knows more about FHA and can shop around for you (rather than one lenders requirements that can be put on top of the FHA requirements)

As far as the credit score thing it's not that bad - the good thing about starting fresh is that you have no baddies.  I got an orchard secured card with no credit history - put $300 in their account and they gave me a card with that as a limit - made sure I paid it in full each month (but allowing a small balance to report which was less than 9%) Also had myself added to DH's Best buy card which meant that within a couple of months I had a score that was over 620.  Once I had that I also applied for a store card (macys) and an unsecured credit card with capital one.  Those were the only inquiries at that time and then 6 months later I applied for another credit card (Town North Bank) which gave me a $2000 unsecured limit (closed Orchard then and got my money back) Now I will just sit back and let them age and keep what I have.  My current scores are all over 710 (14 months into this whole thing)

[Anonymous]

Wow Susy thanks for all that info!   Where did you find it? There was a broker who though she could get around it, maybe I will speak with her.